Green light from the Treasury to review up to 10 years of pending VAT compensation: what changes?
The Tax Agency is authorized to verify VAT credits pending compensation up to 10 years later, even if the originating tax year is time-barred. This recent decision by the Supreme Court, dated July 23, 2026, marks a before and after in tax inspections.
Many companies wonder how this authority affects their tax management and which periods can be reviewed. This ruling makes it clear that the Tax Agency can act on balances generated in time-barred periods when they are to be compensated in tax years still open for adjustment.
How the Tax Agency can verify pending VAT compensation for ten years
Why does this matter to taxpayers? The possibility that the Tax Agency reviews VAT credit balances pending compensation up to a decade later can significantly impact tax planning and legal certainty for companies.
What does the Supreme Court establish about verifying time-barred VAT?
The Supreme Court has ruled that the Tax Agency’s power of verification and investigation is independent of the right to assess. This means that, even if the year in which the VAT was generated is time-barred, the Tax Agency can examine these credits if applied to open periods.
What legal framework regulates this authority?
Articles 66 bis and 115 of the General Tax Law are the legal basis. Article 66 bis establishes a special prescription period of 10 years for tax credits pending compensation. Meanwhile, article 115 allows the verification of operations in time-barred periods if they affect non-prescribed years.
Practical impacts for companies and taxpayers
Why must one be alert? This extension of the review period may mean the Tax Agency reviews old operations previously considered closed, with possible adjustments and penalties.
How does the ruling affect legal certainty?
Companies may be forced to retain documentation for longer periods and prepare for possible audits of VAT credits from previous years, even if these are time-barred.
What strategies can taxpayers adopt?
It is advisable to carefully review and document pending VAT credit balances, maintain strict control of compensations, and consult specialists to avoid surprises in audits.
Controversial aspects and related practical cases
What arguments have arisen in legal disputes? The ruling responds to an appeal from a company that argued that time-barred VAT could neither be reviewed nor corrected, an argument rejected by the Supreme Court.
Why can the Tax Agency investigate despite prescription?
The rule separates the power of verification (up to 10 years) from that of assessment (4 years). Thus, the Tax Agency can verify the origin of credits even if it cannot make assessments on time-barred periods.
What practical examples can be highlighted?
A typical case is when a company compensates VAT credits generated in time-barred quarters within tax years still open. The Tax Agency can verify if these compensations are correct, preventing fraud or accounting errors.
| Aspect | General prescription | Special prescription for tax credits |
|---|---|---|
| Assessment period | 4 years | - |
| Verification period for pending VAT | - | 10 years |
| Possibility to examine time-barred periods | No | Yes, if they affect open years |
With this ruling, the Tax Agency strengthens control over VAT compensations, with an extended period that requires companies to be more rigorous in their accounting and tax filings.
The reality is that this decision may represent a significant change in corporate tax management, especially for companies with complex internal processes or accumulated VAT balances. There is a clear challenge in documentary retention and preparation for possible audits.
